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5 positions were entered among all 4 currency pairs with total loss of 45 points and the positions are listed below:

 9 Jun : USD/CHF - Short at 0.9720, exited at 0.9715 (+ 5 points)
12 Jun : EUR/USD - Short at 1.1230, exited at 1.1240 (- 10 points)
15 Jun : USD/JPY - Short at 109.60, exited at 109.90 (- 30 points)
15 Jun : GBP/USD - Short at 1.2790, exited at 1.2800 (- 10 points)
19 Jun : USD/CHF - Long at 0.9705,

|                 JPY             EUR             CHF            GBP

Jan          + 167             - 85              - 10            + 50
Feb          + 200            +150             +93            - 59
Mar              -23              -70               -23            - 35
Apr             + 65            + 93             + 50            - 40
May            - 65             - 35             + 100          -175
Jun            - 65               -10                + 5            + 90
Jul           
Aug         
Sep             
Oct         
Nov        
Dec                                                                                               
Y-T-D       + 278            + 38               +215           -159     

USD/JPY has pushed higher in the Monday session, as the pair trades at 111.30 in the North American session. On the release front, Japan's trade surplus improved to 0.13 trillion, but this was well short of the estimate of JPY 0.35 trillion. In the US, the only releases are speeches from FOMC members Dudley and Evans. On Tuesday, the BoJ will release the minutes of the April policy meeting.

The Bank of Japan sounded upbeat on the economy in its rate statement on Friday, but the positive spin didn't seem to impress the markets, as USD/JPY lost ground. The BoJ indicated that it had no plans to reduce its ultra-accommodative monetary policy, which includes negative (short term) interest rates and an asset-purchase program of JPY 80 billion/year. The rate statement took note of the stronger Japanese economy, stating that private consumption was showing "increased resilience". This was more hawkish than the April statement, when the bank said that private consumption was "resilient". The economy has shown improvement in 2017, as stronger global demand has boosted the Japanese manufacturing and export sectors. At the same time, inflation remains stubbornly low, well below the bank's target of 2.0 percent. At a press conference, BoJ Governor Haruhiko Kuroda would not say when the bank might exit its current monetary policy. There have been calls for the bank to lower its inflation goal, but Kuroda said that the ultra-loose policy would continue until the 2% target is achieved.

The US wrapped up the week on a sour note, as construction and consumer confidence reports missed expectations. Building Permits dropped to 1.17 million, its lowest level since August 2016. Housing Starts were also week, as the reading of 1.09 million marked the lowest since November 2016. There is concern that the soft construction numbers could weigh on second-quarter growth. There was more bad news from UoM Consumer Sentiment, which dipped to 94.7 in May, marking a 7-month low. This is significant, as it is the indicator's lowest reading since President Trump took office, and points to consumer unease with how the US economy is being handled. There are troubling signs that the June UoM report could be even lower, coming after the Comey testimony which has damaged Trump's credibility even further.

USD/CHF - 0.9739

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9719

Kijun-Sen level                    : 0.9720

Ichimoku cloud top                 : 0.9745

Ichimoku cloud bottom              : 0.9706

Original strategy :

Bought at 0.9705, Target: 0.9805, Stop: 0.9690

Position : - Long at 0.9705

Target :  - 0.9805

Stop : - 0.9690

New strategy  :

Hold long entered at 0.9705, Target: 0.9805, Stop: 0.9690

Position : - Long at 0.9705

Target :  - 0.9805

Stop : - 0.9690

Although the greenback slipped initially to 0.9695, as dollar found renewed buying interest there as suggested and has rebounded, retaining our bullishness and above 0.9755-60 would signal the pullback from last week’s high of 0.9771 has ended, bring retest of this level, break there would extend recent rise from 0.9613 low to resistance at 0.9808 but reckon previous resistance at 0.9825 would hold from here due to near term overbought condition, bring retreat later.

In view of this, we are holding on to our long position entered at 0.9705. Below said support at 0.9695 would defer and risk weakness towards said support at 0.9641 but only break there would abort and revive bearishness, this would also suggest the rebound from 0.9613 has ended instead, bring retest of this level later.

GBP/USD - 1.2751

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2781

Kijun-Sen level                    : 1.2781

Ichimoku cloud top              : 1.2776

Ichimoku cloud bottom        : 1.2754

New strategy  :

Sell at 1.2780, Target: 1.2680, Stop: 1.2815

Position : -

Target :  -

Stop : -

The British pound has retreated after faltering below indicated resistance at 1.2818, suggesting consolidation with downside bias would be seen for test of 1.2690 support, however, a break below there is needed to retain bearishness and signal the rebound from last week’s low at 1.2635 has ended, bring further fall to 1.2650, then towards this support later.

In view of this, we are looking to sell cable on recovery as 1.2780-90 should limit upside. Only break of said resistance at 1.2818 would abort and signal the erratic rise from 1.2635 low is still in progress for gain to 1.2845-50 (61.8% Fibonacci retracement of 1.2978-1.2635) but upside should be limited to 1.2870-80 and price should falter below 1.2900, bring another decline later. 

The US dollar was one of the best performing major currencies after receiving a boost from some hawkish comments from New York Federal Reserve President William Dudley. Brexit negotiations are underway in Brussels, which has potential to create a risk event for the pound and the euro.

A quiet economic calendar today resulted in relatively little movement in the forex markets. However, investors will remain focused on the Fed speakers this week in the aftermath of last week's FOMC meeting.

Dudley kicked off what is a busy week for Fed speakers. He was speaking at a business round-table meeting in Plattsburg, NY today, making hawkish comments that suggested the Fed remained on track to raise interest rates further this year despite recent disappointing US inflation data. Overall, the Fed's rhetoric so far has been favourable for the greenback, especially since the US central bank appears to be looking through soft inflation and is still holding an overall hawkish view.

Chicago Fed President Charles Evans is due to speak later today in the US, while Vice Chairman Stanley Fischer, Boston Fed President Eric Rosengren and Dallas Fed President Robert Kaplan are scheduled to speak on Tuesday.

The dollar rose against the yen on Dudley's comments, rising to 111.38 yen. The euro slid to as low as $1.1170 after hitting a session high of $1.1212. The single currency was buoyed earlier in the day by news that French President Emmanuel Macron's party won the parliamentary elections on Sunday. Flash Eurozone PMI data out at the end of this week would be an important risk event for the euro.

Meanwhile, Brexit negotiations, which officially kicked off today, are also a risk for the euro and more specifically for the pound. Sterling fell to last trade at $1.2747 after hitting as high as $1.2813 earlier in the session.

In commodities, spot gold slid to a 4-week low due to a broadly firmer dollar, to touch $1247.31 an ounce, down 0.5% on the day. WTI oil managed to cross back above the key $45 a barrel, up half a percentage point so far today.

EUR/USD - 1.1173

Most recent candlesticks pattern   : N/A

Trend                      : Near term down

Tenkan-Sen level              : 1.1192

Kijun-Sen level                  : 1.1192

Ichimoku cloud top             : 1.1214

Ichimoku cloud bottom      : 1.1160

Original strategy  :

Sell at 1.1235, Target: 1.1135, Stop: 1.1270

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1235, Target: 1.1135, Stop: 1.1270

Position : -

Target :  -

Stop : -

Although the single currency has retreated after running into resistance at 1.1213, below 1.1150-55 is needed to signal the rebound from 1.1132 has ended, bring retest of this last week’s low, break there would confirm recent decline from 1.1296 top has resumed and extend weakness to previous support at 1.1109 which is likely to hold on first testing. If said minor support continues to hold, then risk of another corrective bounce to 1.1230-35 (61.8% Fibonacci retracement of 1.1296-1.1132) cannot be ruled out before prospect of a retreat.

In view of this, we are looking to sell euro on subsequent recovery as 1.1230-35 (61.8% Fibonacci retracement of 1.1296-1.1132) should limit upside and bring another decline. Above 1.1260-70 would defer and risk a stronger rebound but price should falter well below said resistance at 1.1296, bring another decline later.

USD/JPY - 111.28

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 111.15

Kijun-Sen level                  : 111.02

Ichimoku cloud top             : 110.94

Ichimoku cloud bottom      : 110.12

Original strategy  :

Buy at 110.35, Target: 111.35, Stop: 110.00

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 110.35, Target: 111.35, Stop: 110.00

Position :  -

Target :  -

Stop : -

Although the greenback has rebounded after finding support at 110.65 and test of last week’s high at 111.42 cannot be ruled out, break there is needed to confirm the rise from 108.82 low has resumed for retracement of recent decline from 114.37, bring further gain to 111.60 (50% Fibonacci retracement of 114.37-108.82) and then test of previous resistance at 111.71 but price should falter well below another resistance at 112.13. If said resistance continues to hold, then risk of another retreat cannot be ruled out, below said support at 110.65 would bring weakness to 110.30-35 (50% Fibonacci retracement of 109.27-111.42) where renewed buying interest should emerge there and bring another rise later.

In view of this, we are looking to buy dollar on pullback but one should exit on next rise. Below 110.05-10 (61.8% Fibonacci retracement of 109.27-111.42) would abort and signal top has been formed, bring further fall to 109.85-90 and possibly towards 109.50 but support at 109.27 should remain intact. 

EUR/GBP - 0.8755

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term up

Original strategy  :

Buy at 0.8660, Target: 0.8860, Stop: 0.8620

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.8660, Target: 0.8860, Stop: 0.8620

Position : -

Target :  -

Stop : -

 
As the single currency retreated after rising to 0.8836 early last week, retaining our view that further consolidation below this level would be seen and initial downside risk remains for correction to 0.8700, however, reckon support at 0.8652 would limit downside and bring another rise later, above 0.8836 would signal the pullback from 0.8866 has ended, bring retest of this level first. A break above this resistance would extend recent erratic upmove from 0.8304 low to 0.8880, then 0.8900, having said that, as broad outlook remains consolidative, reckon current c leg of larger degree wave b should be limited to 0.8950 and price should falter well below 0.9000, bring retreat later.

In view of this, we are looking to buy euro on further subsequent pullback but one should exit on such rise. Below 0.8650 would defer and risk test of 0.8620, a break below there would signal top is formed instead, bring further fall to 0.8620, then 0.8600 which is likely to hold from here.

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

USD/CAD - 1.3215

 
Recent wave: Only wave v of c has ended at 0.9407 and wave C of major A-B-C correction is underway for headway to 1.4700

Trend:  Near term down

 
Original strategy       :

Sell at 1.3350, Target: 1.3130, Stop: 1.3410

Position: -

Target:  -

Stop: -

 
New strategy             :

Sell at 1.3350, Target: 1.3130, Stop: 1.3410

Position: -

Target:  -

Stop:-

Although the greenback retreated after meeting resistance at 1.3308, break of 1.3165 support (last week’s low) is needed to signal recent decline from 1.3794 top has resumed and extend weakness to 1.3100-10, however, loss of downward momentum should prevent sharp fall below previous support at 1.3078 and reckon 1.3040-50 would hold from here. If said support continues to hold, then further consolidation would take place and another bounce to 1.3308 and possibly 1.3330 cannot be ruled out but 1.3360-65 would limit upside and bring another decline later.

In view of this, would be prudent to sell again on subsequent recovery as 1.3350-60 should limit upside. Above previous support at 1.3387 (now resistance) would defer and suggest low is possibly formed, bring a stronger rebound to 1.3420-25 but break there is needed to provide confirmation. 

To recap, wave B from 1.3066 is unfolding as an a-b-c and is sub-divided as a: 1.2192, b: 1.2716 and wave c is a 5-waver with i: 1.1983, ii: 1.2506, extended wave iii with minor iii at 1.0206, wave iv ended at 1.0781 and wave v as well as wave iii has ended at 0.9931, hence the subsequent choppy trading is the wave iv which is unfolding as (a)-(b)-(c) with (a) leg of iv ended at 1.0854, followed by (b) leg at 1.0108 and (c) leg as well as the wave iv ended at 1.0674. The wave v is sub-divided by minor wave (i): 0.9980, (ii): 1.0374, (iii): 0.9446, (iv): 0.9913 and (v) as well as v has possibly ended at 0.9407, therefore, consolidation with upside bias is seen for major correction, indicated target at 1.3700 and 1.4000 had been met and further gain to 1.4700 would be seen later.

• A rebound in technology shares set US equity indexes on course for fresh records. European equities rose after French president Macron won a free hand to drive through economic reforms. The pound edged higher and the euro was steady as Brexit talks began.
• In Asia, the focus tomorrow will be on the MSCI Inc. decision on whether to include China A-shares in its global indexes. The past three years, the decision was delayed because of regulation and accessibility worries for global investors. For China, acceptance by MSCI marks a key step to open up its financial markets and attract foreign capital.
• The Aussie dollar declined slightly today after Moody's cut the ratings of the Big Four Australian banks. Moody's cited elevated risks in the housing sector that heighten the sensitivity of the banks' credit profiles to an adverse shock. According to the RBA, the nation's household debt-to-income ratio climbed to a peak of 189%.
• NY Fed Dudley said he's confident that the expansion has a long way to go, that confidence is "very, very high" and that the economy is close to full employment. He said inflation was a little lower than the Fed would like but seemed not too concerned. He also sees wage growth quickening in the future as the job market tightens further.
• The Brexit talks finally began today amid confusion on what exactly the U.K. government wants from the divorce.

Rates

Core bonds open the week in slow-motion

Core bonds initially held a sideways trading pattern in a risk-on environment, but some modest, gradual erosion occurred during European afternoon. The calendar was razor-thin, but "hawkish" comments of NY Fed Dudley temporarily accelerated the decline in the US Note future (see graph). The move in the Bund didn't go far. We wouldn't draw conclusions of today's session, given the lightness of the calendar and the low traded volumes.

The US curve bear flattened with yields up to 2.8 bps (2-yr) higher. German yields increased by 0.1 bp (2-yr) and 1.4 bps (5-yr). Intra-EMU spreads versus Germany (10-yr) narrowed again following a one day interruption on Friday. The narrowing amounted 2-to-4 bps for the periphery, with Portugal outperforming (-6bps) after Fitch upgraded its rating outlook to BB+ positive.

NY Fed Dudley, a key member of Fed chairwoman Yellen's inner circle, sounded rather hawkish. Dudley, who has a rather dovish profile, said inflation was a little lower than the Fed would like. That suggests that he isn't overly concerned about it. In the same vein, he said the labour market is doing relatively well and "confidence is very, very high". He sees wage growth quicken as conditions on the job market tighten further and is confident that the expansion has quite a long way to go.

The Belgian debt agency started this week's scheduled EMU bond supply by tapping three on the run OLO's: OLO 82 (€0.93B 0.5% Oct2024), OLO 81 (€1.33B 0.8% Jun2027) and OLO 78 (€0.93B 1.6% Jun2047). The combined amount sold (€3.19B) was near the maximum of the target range (€2.7-3.2B) with an auction bid cover of 1.59, which in line with this year's average. Belgium now raised €24.82B (71%) of this year's €35B OLO funding need.

Currencies

USD gains marginal ground in dull session

Trading in the major FX cross rates took a very slow start to the new week. The swings of EUR/USD and USD/JPY were negligible in the morning session. The dollar was slightly better bid in the US session, but the moves remains technically insignificant. EUR/USD hovers in the 1.1180 and USD/JPY in the 111.25 area.

Overnight, Asian equities eked out moderate gains, without a specific trigger to explain the risk-on sentiment. The correction of tech stocks that spooked markets last week, has apparently run its course. The positive risk sentiment barely helped the dollar. USD/JPY held close to 111 and EUR/USD near 1.12.

European equities were also captured by a strong risk-on sentiment. Positive spill-overs from Asia and, to a lesser extent, the France election outcome, were the drivers of the risk rally. However, the impact on interest and on the major dollar cross rates was minimal. Both EUR/USD and USD/JPY hardly deviated from 1.12 and 111 respectively.

With no eco data on the agenda in the US, there was no meaningful change of the script this afternoon. The US equities joined the broader risk rally. US interest rates and the dollar gained marginal ground after comments from Fed's Dudley. He was positive on US economic growth and expects that the US expansion has a long way to go. USD/JPY trades in the 111.30 area. EUR/USD slipped to the 1.1175/80 area. Even so, the moves remain technically insignificant.

No impact from formal Brexit start on sterling

UK's Brexit Minister Davis and EU's Barnier gave the formal kick-off for the negotiations of the divorce between the EU and the UK. The impact on sterling trading was limited. The UK currency regained slightly ground today. The first official remarks of UK's Davis were reconciliatory. This creates the impression that the UK aims a softer Brexit than expected before the UK election. However, such a conclusion remains premature as the domestic political situation in the UK remains highly uncertain. EUR/GBP trades in the 0.8750 area. Silvana Tenreyro was appointed to the BoE MPC. She will replace Kristin Forbes. For now, we didn't see much info on her potential voting intentions.